Authored by Ilya Provornov, Account Strategy Director, BidSwitch
Online advertising has undergone significant transformations over the years. One of the most notable shifts was the transition from buying impressions on a guaranteed basis to the era dominated by high-frequency, machine-driven transactions. This article, the next in our Views from the Middle series, explores this evolution, the challenges it brought, and the opportunities for the industry to refocus on quality over quantity.
The Era of I/Os
In a galaxy, far, far away, advertisers, brands, and agencies would book a certain number of impressions, and publishers were responsible for delivering these booked impressions. This model ensured that advertisers received the visibility they paid for, and publishers had a clear target to meet. It was a straightforward system that relied heavily on human oversight and manual processes like I/Os, inputting line items into Dart, Atlas, and many other platforms now lost to history.
The rise of programmatic advertising
As technology advanced, the advertising landscape began to change. Programmatic advertising emerged, bringing automation and efficiency to the buying and selling of ad space. Machines entered the game, and the AdTech ecosystem saw an influx of queries per second (QPS) that overwhelmed demand-side platforms (DSPs), as supply-side platforms (SSPs) looked to maximize their potential revenue opportunities. This shift to automation allowed for real-time bidding and targeted advertising, but it also introduced new complexities and challenges. BidSwitch emerged in 2013 and with that, pioneered traffic shaping to maximize QPS usage for DSPs.
Challenges of high-frequency transactions
The flood of QPS brought by programmatic advertising created a scenario in which DSPs would continue to struggle today without various traffic shaping mechanisms they have in place. The focus of the industry shifted from guaranteed impressions to maximizing reach and frequency, often at the expense of quality – which, in this case, refers to the inventory that is most favorable and relevant for the DSP.
From our position in the middle of the AdTech ecosystem, we’ve started to see a trend emerge in recent years. While more bid requests may contribute to some uplift in media spend, there comes a critical point where DSPs cannot bid on the additional QPS that SSPs are sending. This bottleneck trickles down to lost opportunities for SSPs. In Q1, BidSwitch observed a 100X increase in in-bound requests for only 1.15X the media spend lift. RPMs were approximately 400% higher after traffic shaping.
Call to action: Collaborating for quality
As an industry, we have an opportunity to address these challenges by collaborating to reduce the focus on quantity of transactions and refocus on quality. By prioritizing meaningful engagements and relevant impressions, we can create a more sustainable and effective advertising ecosystem by reducing ad waste. Leveraging traffic shaping tools such as SmartSwitch – the bedrock of the BidSwitch platform, which analyzes 30+ signals in requests and adjusts real-time to determine which requests should be filled accordingly, stands to benefit both DSPs and SSPs alike.
DSPs can ensure that they are receiving the right type and amount of inventory they are looking for, and SSPs can better understand what types of media are being purchased to narrow the pool of inventory being sent, all in real-time.
The rise of online advertising - from I/Os to the age of machines, has brought both advancements and challenges. By recognizing the need for quality over quantity, we can create a more efficient and impactful advertising environment.